ACIT, Gwalior V. M/s Laxmi chand Gulab Chand Saraf, Gwalior

ITA 367/AGR/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0451 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-08-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 06-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER ITA NO.367/AGR/2007 ASST. YEAR: 2005-06 A.C.I.T, CIRCLE-1, GWALIOR. VS. M/S LAXMICHAND G ULABCHAND SARAF, SARAFA BAZAR, LASHKAR, GWALIOR. (PAN : AABFL 1398 R). (APPELLANT) (RESPONDENT) APPELLANT BY : NONE (APPLICATION REJECTED) RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE ORDER PER P.K. BANSAL, A.M.: THIS APPEAL HAS BEEN FIELD BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) DATED 14.06.2007 BY TAKING THE FOLLOWING GROUNDS OF APPEA L :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN DELETING AN ADDITION OF RS.20,444/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF GROSS PROFIT ON THE ALLEGED UNDISCLOSED SALE OF JEWELLERY WORTH RS.1,58 ,531/- AS PER SEIZED DOCUMENTS HOLDING THAT THESE SEIZED LOOSE PAPERS ARE MERELY E STIMATES AND THAT THE TRANSACTIONS DID NOT TAKE PLACE. THE DECISION OF T HE LD. CIT(A) IS NOT ACCEPTABLE BECAUSE IT IS A UNIVERSAL FACT THAT THE JEWELLERS I N MOST OF THE CASES DO NOT ISSUE SALE BILL AND THE BILL IS MADE ON A PLAIN PAPER ON WHICH ESTIMATE IS STAMPED OR PRINTED AT THE TOP. THE BILLS ARE NOT ISSUED BECAU SE OF THE SUBSTANTIAL SALES TAX LIABILITY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN DELETING AN ADDITION OF RS.13,21,800/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH HOLDING THAT THE JEWELL ERY WAS DEPOSITED BY DIFFERENT PERSONS FOR REMAKING/REPAIRS AND THAT THIS WAS RECO RDED SEPARATELY IN THE LEDGER. 2 THIS FINDING OF THE LD. CIT(A) IS CONTRARY TO THE F ACTS MENTIONED BY THE ASSESSING OFFICER ON PAGE 5 OF THE ASSESSMENT ORDER THAT THE ASSESSEE DOES NOT MAINTAIN ANY RECORD OF THE DEPOSIT OF OLD JEWELLERY AND IT IS VE RY DIFFICULT FOR THE JEWELLER TO REMEMBER ALL THE TRANSACTIONS UPTO THE LIMIT OF MIL LIGRAM IN EACH CASE WITHOUT RECORDING IT IN WRITING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM CARRYING ON BUSINESS IN SILVER AND GOLD JEWELLERY. IN THE CASE OF THE A SSESSEE, ASSESSMENT UNDER SECTION 143(3)/153A WAS COMPLETED IN WHICH CERTAIN ADDITIONS WERE MADE AGAINST WHICH THE ASSESSEE WENT IN APPEAL. THE REVENUE BEING AGGRIEVED HAS COME IN APPEAL BEFO RE US. 3. IN RESPECT OF GROUND NO.1, THE A.O. MADE THE ADD ITION ESTIMATING THE GROSS PROFIT (GP) @ 12.9% ON SALES ALLEGED TO BE NOT RECORDED IN THE BO OKS TOTALING TO RS.1,58,531/- AS PER THE SEIZED PAPERS NO.86, 92, 100 & 135,. THE ASSESSEE CONTEND ED THAT LOOSE PAPER NO.86 WAS MERELY A SALE ESTIMATE. LOOSE PAPER NO.92 WAS ALSO AN ESTIMATE. LOOSE PAPER NO.100 WAS DATED 29.12.2003 WHICH DOES NOT PERTAIN TO THE A.Y. 2005-06. LOOSE PAPER NO.135 IS AN ESTIMATE OF RS.62,890/- AND THERE WAS NO SALES OUTSIDE THE BOOK. THE CIT(A ), AFTER VERIFYING THE CONTENTION OF THE ASSESSEE FROM COPY OF THE LOOSE PAPERS PRODUCED BEF ORE HIM, GAVE THE FINDING THAT THE LOOSE PAPERS WERE IN THE NATURE OF DUMP PAPERS AND DOES N OT PERTAIN TO ACTUAL TRANSACTION AND ACCORDINGLY HE DELETED THE ADDITION. 4. THE LD. A.R. RELIED ON THE ORDER OF THE CIT(A). AFTER CAREFULLY CONSIDERING THE SUBMISSIONS MADE BY THE LD. A.R. AND GOING THROUGH THE ORDER OF THE AUTHORITIES BELOW, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN T HE ORDER OF THE CIT(A). THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. WE ACCORDINGLY DISMISS GROUN D NO.1. 3 5. THE BRIEF FACTS RELATING TO GROUND NO.2 ARE THAT THE A.O. MADE AN ADDITION OF RS.13,21,800/- ON ACCOUNT OF ALLEGED EXCESS GOLD JE WELLERY FOUND AT THE TIME OF SEARCH. THE ASSESSEE EXPLAINED BEFORE THE A.O. THE REASONS WITH REQUISITE DETAILS FOR THE DIFFERENCE IN THE QUANTITY OF CLOSING STOCK AS PHYSICALLY FOUND IN SE ARCH AND AS WORKED OUT IN THE TRADING ACCOUNT BY THE ASSESSEE. THESE REASONS CONSISTS OF: - I) THE COINS, DAMAGED AND BROKEN PIECES OF JEWELLER Y WERE TREATED AS PART OF THE GOLD JEWELLERY WHILE THESE ITEMS WERE PART OF BULLION AN D WERE ACCOUNTED FOR IN THE BOOKS IN THE BULLION ACCOUNT. II) CERTAIN GOLD JEWELLERY PURCHASED WAS NOT ENTERE D IN THE PURCHASE BOOK. THE DETAILS OF SUCH JEWELLERY WAS SUBMITTED. III) THE ASSESSEE FIRM, AS USUAL PRACTICE WITH ALL JEWELLERS, HAS RECEIVED GOLD JEWELLERY FOR REPAIRING FROM VARIOUS PERSONS WHOSE STATEMENTS WER E DULY SUBMITTED BEFORE THE A.O. ALONG WITH THE EVIDENCE OF THESE JEWELLERY WHICH WE RE TREATED BY THE A.O. AS PART OF GOLD JEWELLERY.. THIS WAS ALSO RECORDED SEPARATELY IN T HE LEDGER. IV) THE LEDGER ITSELF IS AVAILABLE WITH THE A.O. V) THIS IS AN ACKNOWLEDGED FACT THAT BARE GOLD BULL ION AS SUCH IS NOT SOLD AND THE GOLD BULLION IS BASICALLY USED FOR CONVERSION INTO A MAK ING OF JEWELLERY AND ACCORDINGLY THERE WAS TRANSFER FROM GOLD BULLION ACCOUNT TO GOLD JEWE LLERY ACCOUNT WHICH IS EVIDENCED BY THE ENTRIES IN THE BOOKS. 4 VI) IT WAS ALSO POINTED OUT THAT THERE IS NO EVIDE NCE ON RECORD TO INFER THAT THE STOCK OF GOLD BULLION HAS BEEN UTILISED BY THE ASSESSEE FOR SOME OTHER PURPOSE OTHER THAN MANUFACTURING OF GOLD JEWELLERY. VII) PURCHASES OF OLD GOLD JEWELLERY IS DULY RECORD ED IN THE LEDGER. VIII) THE STATEMENTS OF THE PERSONS THAT THEY HAVE GIVEN THE JEWELLERY FOR REPAIRING/REMAKING WAS ALSO RECORDED BY THE A.O. BUT NO PLAUSIBLE REAS ON WAS GIVEN TO REJECT THESE STATEMENTS. THEIR STATEMENTS WERE IN THE NATURE O F PRIMARY AND CREDIBLE EVIDENCE AND THE A.O. MUST HAVE ACCEPTED THE SAME. . 6. THE CIT(A) DELETED THE ADDITION AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE AND ALSO THE FACT THAT THE ASSESSEE HAS DULY DISCHARGED HIS ONUS ON THE BASIS OF THE STATEMENTS OF THE PARTIES PRODUCED. IT WAS ALSO POINTED OUT THAT SIN CE THERE WAS SHORTAGE IN THE BULLION THAT WAS NOT UTILISED FOR ANY OTHER PURPOSE OTHER THAN MANUFACTU RING OF GOLD JEWELLERY, THE ASSESSEE IS ENTITLED FOR THE SET OFF OF ACTUAL JEWELLERY AGAINST SHORT B ULLION. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. A. R. AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDERS OF THE AUTHORITIES BELOW. 8. THE CIT(A) HAS GIVEN THE FINDING OF FACTS ON APP RECIATION OF THE EVIDENCES AND GOING THROUGH COPY OF THE PAPER SEIZED. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE CIT(A) ESPECIALLY WHEN NO CONTRARY EVIDENCE TO PROV E THAT THE FINDING OF THE CIT(A) IS NOT 5 CORRECT ON FACTS WERE PLACED BEFORE US EVEN THOUGH THE REVENUE IS IN APPEAL. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND ACCORDINGLY DIS MISS GROUND NO.2 9. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2010). SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 27 TH AUGUST, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY